A former Wells Fargo Bank loan officer was sentenced to jail time and house arrest last week for taking a $50,000 bribe linked to the largest fraud against the Export-Import Bank of the United States. Gerardo Uribe was involved in the scheme of San Antonio businessman Andrew Maxwell Parker, MySanAntonio reports. Parker is currently serving a sentence for pocketing $10 million from more than $100 million in fraudulent loans backed by the Export-Import Bank. Record show in 2006, Uribe helped a Parker associate in Mexico get a $3.2 million loan, purportedly to buy American equipment. Parker’s company was listed as the exporter, with a purported Texas company listed as the supplier. Rather than buy equipment, Parker’s associate, Parker and others divvied up the money and the loan went into default after two payments, forcing the Ex-Im Bank to make good on the $2.9 million balance, court records say. Uribe initially, declined, but later took a $50,000 bribe from Parker’s associate.
Read MoreAccording to the latest Federal Reserve figures, 26% of banks experienced “moderately stronger” demand for commercial and industrial loans from small firms during the fourth quarter, CNNMoney reports. That was the highest percentage all year, and an 8% jump from the previous quarter. The survey was compiled using responses from senior loan officers at 56U.S.banks with annual revenues of $50 million or less. It’s not all bright though, 62% of banks reported no change, indicating the uptick does not equate to a total rise in demand. 94% reported that credit standards for small firms “remained basically unchanged,” and a similar portion said the maximum size of credit lines and requirements on collateral also stayed the same.
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This is one of the two eastern Oregon dealerships the Spangenberg brothers owned and used to defraud KeyBank.
Nobody knows what it is about the profession, but in the auto dealership industry, there seems to be a higher concentration sleezeballs. Meet the Spangenberg brothers, Roger and David, the owners of the now closed D&R automobile dealerships in Washington, and Steven Johnson, the manager. All three have been charged with conspiracy to commit bank fraud.
Here is how it went down: According to LoanSafe.org, from January 2007 through August 2008, the brothers and Johnson conspired to defraud KeyBank in connection with a Floorplan Line of Credit and Security Agreement. KeyBank extended a line of credit to the dealerships to purchase new inventory, but the Spangenbergs and Johnson failed to repay the bank after they sold the inventory. To cover their tracks, the indictment alleges that the trio deceived KeyBank into believing the dealerships had not yet sold inventory by asking customers to return recently purchased automobiles to the dealerships to receive a free service on the day of an audit, and telling KeyBank that automobiles not present on the lot were being used as rental cars.
KeyBank suffered a loss of more than $6 million as a result of the alleged fraud. All defendants plead not guilty, and the trial is set for March 27. We will be keeping an eye on this one.
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This edition of Fraud Friday reminds you to always look financial statements.
A California couple has plead guilty to defrauding a consortium of seven banks and others , in connection with a $130 million line of credit, loansafe.org reports.
Thomas Fu and his wife Cheri Fu owned Anaheim-based Galleria USA, Inc., which imported home décor items manufactured in China. The couple obtained a revolving line of credit from seven different banks, and overstated by tens of millions the accounts receivables of the company – lies they told in order to continue borrowing funds under the line, according to court documents. They also admitted to falsifying in Galleria’s computer system the accounts receivable amounts by a factor of ten or more times the actual amount purchased to support the exaggerated numbers and hide Galleria’s true financial status.
The estimated loss of the banks was about $4.7 million.
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Why do women receive nearly a third less than their male counterparts in start-up capital?
An article from Inc.com says that women-owned business start with a third less capital than those owned by men. But women who’ve done it, say there is no reason they can’t get the capital they need.
A Department of Commerce survey of women-owned companies across the U.S. reported that women-owned firms started life with only 64% of the capital of male-owned firms and were less likely to tap outside financing over their lifetime, including loans, angel investments, and venture capital. Average women-owned businesses had 25% lower revenue than the typical male-owned firm in the same industry.
The government report doesn’t blame gender bias, rather that women are less likely than men to ask for outside funding. Other research suggests that differences in credit scores, growth potential and firm size account for all of the variance.
Read More to See Why Women Borrowers Say It’s Party the Customers Fault.
Read MoreIt is a common saying in this industry that, though nearly a third of all restaurant loans default, the restaurant industry garners the most loans annually of any industry. Though restaurants are always a challenging project, the past five years have pared the survivors down to the very best. Take the story of Sizzler, who at its height in the 1980s, was worth $1 billion and had more than 600 units nationwide. But, by 1996 the family chain had filed for bankruptcy, and downsized operations by 15% from its height. However, a new CEO in 2008 has slowly but surely turned the company around. “It took two years to clean up the balance sheet, but we got it done,” CEO Kerry Kramp said to Restaurant Management Magazine. The restaurant now has had double digit sales gains since 2008. Click Here to Read More about Kramp’s Methods.
Read MoreIf you haven’t been already, be sure to head over to Coleman’s Small Business Lending Group on LinkedIn, to check out the latest posts by members, Inside Main Street, and editor Bob Coleman himself. Today, Coleman has made an interesting post on Hotel Operators and their optimism. Having attended the American Lodging Investment Summit earlier this month, Coleman explains the three things he learned from attending, a comment on the lodging industry as a whole, and a recap of his talking points on Fox News, discussing the “State of the Union of Small Business Lending.” Head over to LinkedIn today and join Coleman’s Small Business Lending Group here. To read Coleman’s weekly blog post, click here.
Read MoreLast year, SBA’s Inspector General issued a scathing audit criticizing Banco Popular for its underwriting procedures for the franchise, Huntington Learning Centers. The IG wrote that the bank failed to properly analyze and underwrite applicant projections. This failure warrants the denial of the SBA guaranty for all of the bank’s Huntington Learning Center franchise loans says the OIG. While SBA’s Inspector General is not the final arbiter of SBA’s policies and procedures, it is a necessity that SBA lenders understand their thinking in order to ensure the validity of their SBA guaranties. In response to the Inspector General report, we have scheduled this webinar that will carefully examine the audit so that you will have the necessary current information to craft your institution’s credit box with respect to franchise start-up loans. Sign up now, this February 7th webinar can not be missed! Read More or Click Here to Download an Order Form.
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Emerging from near bankruptcy, Quiznos has announced it plans to open 80 to 100 units in 2012.
Quiznos narrowly avoided bankruptcy this week through an eleventh hour private equity investor. Riding their new $150 million cash injection, Quiznos has announced it is hoping more selectiveness and support for franchisees will turn into growth in 2012.
In an interview with Nation’s Restaurant News, the company’s chief development officer said that the chain plans to open 80 to 100 new domestic units this year, along with another 80 locations in convenience store and other non-traditional locations. The CDO also said Quiznos will now be able to offer more operational field support to franchisees, as well as contribute to a “good, thoughtful” national media campaign. They will continue franchisee incentives like a reduced franchise fee of $5,000 for qualified operators, and rebates for well-run restaurants. Just as character is the first C of Credit, it is also the first C for franchisors looking to stay cautious while emerging from a near bankruptcy.
“We’re going to be more selective about our locations, but also about the type of franchisees we’ll be working with,” Quizno’s senior vice president of franchise development Sean Fitzgerald said, “We’re marrying the right spots with the right operators.”
Read MoreBoeFly has announced that lenders and franchisors hold similar expectations for growth, according to their recent webinars. Most of the lenders who participated plan to originate more franchise loans in 2012, and most of the franchisors said franchisee access to financing is “very important” for their growth plans. The January 11 webinar polled a group of 133 lenders on topics such as dollar amounts of small business loan originations, start-up equity injection amounts, borrower experience and veteran programs. A group of 120 franchisor executives were asked to answer questions regarding growth in 2012, geographic expansion plans, and the addition and remodeling of units.
Lender Responses:
- 83% expect to originate more franchise loans than they did last year
- 44% expect to originate $1 million to $20 million in small business loans in 2012
- 40% require between 11% and 20% equity injection on a start-up, and 39% require between 21% and 25% equity injection
- 88% are willing to fund a borrower’s first franchise unit
- 81.5% would consider participating in programs for veterans
Franchisor Responses:
- 84% expect to see more growth in 2012 than they did in 2011
- 93% said franchisee access to financing is “very important” for their growth plans
- 74.5% plan to expand in the South, 49% plan to expand in the North, South, East and West in 2012.
- 61.5% plan to add between 0 and 20 new units this year, and 23% plan to add between 21 and 50 new units
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